the dow shooting to make it eight straight winning sessions today. the s&p 500 closed above 1400 for the first time since june of 2008. you have the s&p above 1400. all the indices sitting at incredibly high levels. they are indicated to open at this point relatively flat. you'll see that those s&p futures are right in there. at this point, the dow futures are down by eight points. at 8:30 eastern time, the price index see headline rising by a half percent. then coming up at 9:15 and at 9:55, we get march consumer sentiment. >> the u.s. economy is growing again, but he cautions it faces tough challenges to call for action and to foster expansion. foster spoke to the economic club of new york. he singled out rising oil prices. he also argued the economy is now more productive than it was before the financial crisis.

but he warns that confidence remains fragile, in his words. in other news, richmond president says the decent that we saw in the last central bank's decision this week, because he thinks rates will need time to rise sometime next year in a statement posted on the richmond's web site, lacquer says the economy is expanding at a moderate pace. he was the only vote, you might recall, against that decision. >> in corporate news, apple's new ipad goes on sale today. the tablet has a sharper screen than most sophisticated television sets. but because of a bigger battery, it's heavier than some of its predecessors. some camped out to be the first to have this new device. others simply went to a walmart that was open all night. the ipad went on sale there at midnight. this is interesting. this is a new line of sales for apple.

it's becoming and having these ipad sales there to have lines at the walmart as well. apple shares topping $600 during yesterday's trading session. >> they didn't close there. 585 and indicated at 587 this morning. >> it only hit the 500 mark about a month ago. >> it's 545, 545 billion. so well above that. the most valuable company in the world. >> let's go to a check on marks. by the way, this is a quadruple friday. so we'll see if that has any sort of impact on the markets as we. take a look right now. you're going to see oil prices. at this point, are up about 39 cents. 105.50. what happened with the petroleum story yesterday, first the indication that the white house and britain had cut a deal. and then the white house saying that was not the case. so we did see some pretty crazy

moves yesterday. >> would be crazy to do it. at 1:05, the other point is why do it now when you know prices always go up. >> nothing's happened with iran yet. >> reuters are standing by their story. they were standing saying there was some sort of a deal cut to do it somewhere down the road as we head into the summer. now that we've got the story out, crazy back and forth. you wonder if it would have a less impact if they did it at this point. >> and the historical impact on what it does to the commodity prices. it's an initial impact. a short term impact. it really hasn't had much of an impabalate. and, therefore, why do it now? oil has stayed above 1:05. but then it's obviously there's different currencies that factor into the price. >> the issue here is that the geopolitical premium, i always loved the analysts.

this $18.75 political premium. whatever they think it is, it's clearly more than think think it is right now. that ice all about iran. and what we may see. >> let's take a look at the ten your right now. as you saw the yield pushing back, still standing there at this point, 2.3%. and the dollar, which has been strong all week long, you can see up again today. the euro is at 130.56. gold prices, which have collapsed as joe just mentioned this week are down about $9.70. >> in global news this morning, u.k. chancellor george os born wants to slash the top income tax rate in next week's budget. and ross westgate is going to fill us in. he joins us from london with the details. how did your picks do in the

beginning of march madness, ron. >> well, look. you know, my march madness was related to the rugby joke rather than u.s. sports. it's an overboard. you'll be familiar with games and overbulls. >> are there 64 teams -- or 68 teams? they're not, are there? >> no, there aren't. no, there aren't. it's a different thing. i've got enough problems trying to focus on my own sports. i can't do your guys, as well. >> your loss. your loss. >> another big day. >> boy, and i watched -- and i must have watched six games, i think, yesterday. but it's fun. but i guess rugby could be okay. >> yeah, you know, yeah. it's the by nation of our international championship this weekend. i'm going to focus on that. i'll come back to you in just a second. you mentioned george. he's got a buts next week. there's been speculation in the press here this morning that he may try and reverse the -- well,

some have regarded selling business circles, the damaging increase by the last government, the labor government, from the high rate of tax from 40% to up to 50%. speculations following that may get cut. i'm -- i would still be fairly skeptical of that. it would come because of the coalition with something else and some other money-raising excise like matching tax. so we'll have to see how that story goes. it would be welcomed by business generally. european stocks at fresh 201 highs in germany and france. today, just holding onto those levels. underperforming yesterday, we saw oil stocks dip down. so just out from this morning, up about a 30% flat elsewhere. what has been good is we continue to see bond yields edging higher again through this morning. now, we started the week down around 1.8% on the yield. we're near 2%.

1.988, 2% has been sited as a key for yields. guilds have not had a great week. we're up to 2.140 and.220. what has done okay italian btp yields down below 5%. and the spread, of course, has continued to narrow between italy and germany, as well. so on that metric, it shows people are feeling a little bit better. but all to play for, you've got quadruple witching to get through, as well. so nobody's necessarily putting on major investments this morning. that's where we stand here in europe ahead of the u.s. session. what i was thinking, guys, next week, what i might do is i might come there with you and sit on the set with you and do my hit there, if that's all right. >> wait a second. i hear you may join us a little

longer, ross. >> you never know. that's the problem. i'm going to be with you monday morning. >> that is good. on the first board, there was a lot of green. that has -- i forgot about tomorrow. is tomorrow saint patrick's day? >> i didn't wear green. >> i didn't, either. i forgot. there have been times in the past where i forgot and i wear orange and i get nailed from people say wag are you some kind of british -- i didn't know orange was -- now, are you guys getting along? you don't care there's a lot of green behind you today? you're sure? >> yeah, i know i'm comfortable. there won't be, you know, it's a big day in london, as well. it's actually my birthday on the 18th. so i'm kind of focused more on that. you know where saint patrick's day started? boston. not ireland. >> are they still turning the river green there? >> in chicago they do.

in chicago. still on fire in cleveland. and then you know mcilroy, both of these guys, ireland is suddenly pretty good. >> and darren, the open champion. >> we've got three major champions out of northern ireland. >> and you'll always have u 2. >> you see he's wearing a narrow tie? he's not wearing that big tie that goes out there. he's getting ready. you look at that? you see? he's -- i'm going to -- >> are you going to have one of those tie that is goes where the knot goes all the way out to here? bring one of those from over there. >> you got it. >> okay. >> i can't wait to see you. happy birthday, we will see you right here in the flesh. when we come back this morning, well, in the flesh and clothes. >> oh. you -- all right.

i mean -- >> that is not indicative of my mind. >> i didn't say it. >> this squawkward moment has been brought to you by joe kirby. >> no, that was all -- that was not even a set up. that was all sort of -- that was all becky right off the tong. . >> we'll see ross in the flesh. >> that's a common phrase. >> i wouldn't use it. >> all right. when we come back, we have a live report from an apple store in new york where fans are waiting on line for the new ipad. first, we have a little march madness. top seeds advancing to the next round of the ncaa men's basketball tournament. number 12, vcu and number 11, colorado, were the only double digit seeds to win yesterday. at least it was your alma mater, so i'm sure you picked them. >> i normally would have.

but i've gotten burned in the past with my sentimental picks. >> i lost three. but i think that's average. >> i let my son do the bracket and we only lost one. long beach. >> that's the only one you lost? >> well, i can't take real credit for it. it was his bracket. >> you really only lost one? >> that's the way i was told, yes. >> wow. i need to see this. >> all right, squawk, we'll be right back. tell us how you're doing in your brackets, too. squawk at cnbc.com. see ya. orrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future.

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all right, welcome back, everybody. u.s. equity features are indicated relatively flat. this isn't quadruple witching day. we've been watching very closely about whether or not the sbr is going to be tapped. we're watching oil very closely. it's around $105 and change. in our headlines, boeing says it will move production at the horizontal tale of its 787 dreamliners from seattle to salt lake city by the end of this year. >> the u.s. chamber of commerce filing a motion to challenge president obama's recess appointments to the national labor relations board. in january, the president set off a furer when he bypassed

congress and installed nominees. they were possibly illegal because they were made when the senate was still technically in session. >> it was business as usual with his white house. i don't even know why i'd sue. i'd sue for defamation of character, i guess. >> this reflects the steady growth in global demand. probably also reflects the steady growth in oil prices, too. >> now to this weekend's forecast.

scott williams joins us from the weather channel. boy, i'm glad -- wednesday, it was about 70 degrees. i ate outside by yesterday back to wishing it was wednesday, scot. >> temperatures up down, up down. now, for today, new york city, look for highs in the low 60s. scattered showers and some thunderstorms. toward raleigh. minneapolis today, temperatures in the mid 70s. what about your saturday. sainted patrick's day looking at the parade weather in new york city. temperatures topping out in the low 60s.

>> scattered showers and thunderstorms up around the ohio river valley and parts of the mid atlantic on your sunday, but, once again, temperatures above average. if you have air travel plans today because of the weather and new york city watching out for major airport as showers and storms move in. san francisco, wet weather there, thunderstorm activity, we'll slow your comgo around atlanta. 81 degrees in chicago. two consecutive days at or above 80 degrees for the month of march. unprecedented. 81 degrees was the record high in st. louis. right now, stepping out doors, it's 44 degrees in new york city. we're looking at mid 50s in charlotte and also mid 50s in san francisco. >> scott, you too. and happy saint patrick's day, too, by the way. >> thank you, but i'm not wearing green. >> i know. somebody's going to get pinched. >> let's get to the buzz of the story. the new apple eyepad.

>> let's talk about the apple ipad, the new hot story that's out there. natalie, good morning. >> good morning. this is a different kind of march madness. some of them have been here since 4:00 a.m. handing out ponchos, just kind of huddling together. even though apple sold 15 million units in the last quarter, people wanted to wait for their christmas present

people are probably not going to want to upgrade. people get crazy. i talked to the first guy in line. he says he's been here since monday eating pretty much nothing but hammerings. apple has been kind enough to let him use their facilities. as to his personal hygiene, i'll just let you guess. you're going to see what this could mean to apple.

it's the managing director and senior i.t. hardware analyst and global sector coordinator of technology. this -- i wouldn't call it a game changer. this is going to keep apple going, isn't it? >> i would think so, joe. and it's pseudocomb eas's got a features and could probably attract more users, as well. >> what are the best ones? >> actually, what you don't hear a lot about is the software. we have to remember, this is probably the only time that you can do stuff with. an iphoto is really ground breaking. the more futures they put into the -- the more software features they put into this thing make it more usable. i think some people forget that, that this is actually -- the software is one of a kind. and the ecosystem, one of a kind. and you can do the most with it with this company's products. >> you know, ben, i think it's pretty cool. and you're right. i'm sure it is attacking the p.c. market. but isn't it the more things

that they put on it, isn't it more than it attacks the imacmarket, as well? >> well, it does. but given the apple halo effect. when you do want to sit down and use a p.c.-like device, more and more folks are going to the mac. we're seeing it do more growing. when you do want that kind of device, more and more folks are saying, you know, i've got an iphone, i love it. >> you can't just keep doing this, though, i guess. with the stockware, it is. obviously, it's been -- once you get up -- i don't see too many companies go above 600 billion. and i've been saying this since 300 billion with apple. so i've been wrong. i remember when nbc was losing frien

friends. >> well, i think that they are working on something. it's pretty obvious. >> i think they want to make sure that the service is good. and that when they launch this tv, that the service is really intact. it's a great, one-of-a-kind service. >> you were right. remember, i gave you some grief that day. i'm talking about gary. you've got to let your profits run. and then it went from 540 back down to 50.

>>. >> ben, ret me ask you a question in terms of the profit margins on each ipad unit that was sold. do you have any sense on what it looks like today and what that may mean for the fifth and sixth generation? in the past couple launches, we think that the gross margin has dipped down and then it scales a little higher. so eh think this one might go into the 30s. so i think when they start, there's a little bit of lower margin.

>> and, joe, that's really the amazing thing about it. the facts that the margins are going higher. everybody knows if apple wanted to squeeze the supplier, they have the leverage to do it. >> i guess my question is if you're feeling really good about apple, would you also say by the nasse doc 100 and is there a point where you get concerned that both the stock and the index have risen?

>> they feel that their firms are under way to apple. apple got so big and maybe it reverts to the mean and people are saying to themselves, wow, this is for real. tim cook is doing a great job. many funds are trying to earn more where they're scared that this is actually sustainable. this is a juggernaut. let's also make sure that we're not structurally overweight. and that we're strategically right here because if apple is sustainable, then we might actually be overweight companies that apple is hurting. so it's an interesting thing we've noticed rielgts here. i think it's contributed to the recent run that firms that have started 2012 and said hey, this is sustainable. let's get on board. and let's also make sure that we

don't have overexposure to companies. >> it's now like how many companies. >> i don't think you have enough minutes in this program. but what's cool -- >> and we keep finding more. >> yeah, you go through books to music. but also, there are a bunch of companies that help apple. we have a list of names that are in the food chains. and there are lists of compan s companies. and we do have a list of names that are helped by apple and are along for the ride, as well. >> coming up, we're going to head to the futures for a preview of the trading week ahead. and then we'll be talking to

former top shell executive. fist, though, as we head to a break, let's take a look at yesterday's winners and losers.

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good morning. i'm jim along with becky quick and gary kaminski. stupid husband. >> we're looking at the brackets. he tells me i'm in the midst -- we do this. cbs sports and tv news. and your husband told me i was in the middle. tied for third. he's in second to last plays. place. >> he's tied for last. >> nice work. >> reed was named c.e.o. in 2010 and the company says he was rewarded for efforts to redefine

pfizer as its lipitor cholesterol fighter this year. >> profits are expected to be roughly flat in the first quarter. the demand in china is largely to blame for the split. but the company's cfo says utx stands by its forecast for this year. >> all right. now, to the markets. scott joins us from the cme group. scott, as we sat here on monday and we thought about this coming week -- boy, that jacket just -- that wakes you up at 6:33. and the answer at that time on

monday was no, not really. it was really the major driving factor. now that that's out of the way, what do we look for next as the next catalyst if we think the s&p is going to continue higher? >> you've got the wait and see if some of these money shows up in the equity market. that's our next big they think. that treasure has taken a beating. i think that the only trepidation there is that we've got that stronger u.s. dollar. it's keened of making people a little bit more nervous than they would normally be. >> that was people selling fixed bonds. they just essentially kept that on the sideline? >> i was expecting that there

would be some sort of move that way. it really hasn't shown up. but we had that on the back of the bank's stress test. >> a lot of hinges on the u.s. corporations. if people get a little bit more comfortable on how that's going to react. i still think you could see that next leg up in the equity markets. however, go back to october. we've had a great move. and eh think that we need to have some sort of truth serum here and make a good sidewise move for a little bit. >> i was here the day you said it. i will always be able to confirm. >> does it matter anymore?

>> i'll sit here and say it's absolutely huge. >> i think that's another reason why that ten-year sell off is still -- see, there's a mild trepidation about piling back to equities because of what really could turn the corner again in europe. >> all right, scott, thanks. have a good weekend out there. >> if you have any comments or questions you see here, anything we've been talking about this morning, maybe your brackets and what you sign up for. when we come back, former show executive john hoffmeister. we're going to talk to him about the espr and what happened yesterday. plus, how much would you play for a 55-year-old bottle of scotch? there were so very big names and very big numbers.

we'll get the details when i come back. >> you're watching squawk box. i had a print out of how many hours i have actually put in over my career. and it's 168,000 hours. so just think, if you had an 8-hour job, i'm like a man of 100 and something years old. i've worked very hard to support my family. and i finally reached that point where i'm going to retire. ♪

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aattention whiskey con soars. the most expensive bottle ever. $94,000. that's more than $3700 per ounce. after an intense bidding war was over, the winner said he's willing to pay top dollar for such a desirable brand. all right. the celebrity face of the evening was adrian of hbo's eent rage.

he says the megabucks that you see prove that the luxury market is back for the right items. we goats distractsed a little bit by having a lot of things. and a lot of choices. but now it's about specificity of choice. and cure rating our choices. >> in case you were curious, this whiskey would cost $474,000 per gallon. think about that against $4 gasoline. hopefully, adrian was able to avoid. you know, he had to get sober. he had that incident with the porn star and really sort of fell off the wagon in terms of substance abuse and drug abuse and alcohol abuse. see, i'm doing it again.

i'm doing aqua man again. >> we can't expect them to be with it too much. >> it wasn't really adrian. if you remember that season, thebe then he came back with avengeance. the one where he actually had to take the drug test. did you see that one? >> the lines -- the lines of, you know, with that appropriate program, by the way. you know, don peppe is real wrestling. they clamped real clamps. absolutely. >> and there's tequilla, too. >> yes, yes, yes. you know, you sort of mix it in.

oil prices gyrate yesterday. >> joining us right now with his outlook, he's the former president of shell oil and the founder of citizens for affordable energy. john, the release of the spr, this rumor running around yesterday did bring prices down a little bit. then we heard the white house denied this. what do you think's happening here? >> well, it could still happen that the spr is used to try to adjust the price. it happened last summer, if you recall. and i think we got all of seven days of price relief. and then we were right back where we started. so the spr is really a strategic reserve for national security reasons in the event of shortfalls. we're not experiencing a shortfall. we're experiencing high prices due to global supply demand relationships. and i just don't think that

retail politics should determine what happens to the strategic petroleum reserve because it's not a fix. it's just a pell yeahtive. and that palliative wears off in a matter of days. the underlying problem, as we've talked about before, is we've got a lot of decline going on in existing oil fields. we have to find 7-8 new barrels every year to replace declines to keep up with demand. and, on top of that, we've got china and india that are growing demand rapidly. so the irony here is we're using what. 6, 7% less oil this year than last year and the price keeps going up? that's not because of u.s. demand consumption relationsh s relationships. it's because the global relationship is out there. >> but china has been brought down and the price of oil has continued to climb anyway. most people would point to geopolitics is the real reason that you're seeing prices to continue to push higher. you didn't list that among the

issues you think are really pushing prices up. >> geopolitics is leek putting hot sauce into a spicy chilly sauce. yes, there's geopolitics. it adds to the daily tension as they're buying and selling contracts. the reality, however, underlying it all, china's growth may not be as rapid as it was. but 7.5%, which is the current official target, imagine this economy. imagine the united states a as .5%. we'd all be out celebrating. the fact that china has come down a couple of points doesn't mean it's going to use less. it means it may not require as much as it would have at the higher rate. but ricks still, it's going to require more oil this year than last year. the fact of the matter is, becky, that when we have no plan in this country to increase our

overall production, the interior secretary has put a business as usual plan out. the oil shale in colorado will not be produced kbheshlly. not on his watch. so we can do r&d but we're not going to open up the oil shale in colorado. >> do you think he has it in his power to bring the announcement down? what would that do to crude oil prices over the course of one, two, three months. >> i think if the president showed leadership and said to the american people and, therefore, the whole world, we used to produce 10 million barrels a day in this country.

we're down to about six. we have the permitting authorities gown to 10 . >> it would take a lot of the pressure off particularly the long term trades, and it would even, i think, affect the short term trades. >> all right, john, thank you very much for joining us this morning. >> all right, thank you. >> all right. looking at my planning out my day. wow, it starts at 12:15. texas, cincinnati. yeah. and it ends -- it won't end

until xavier plays noter day dame. 9:45. but when you do the brackets, every game, you're watching every game. every game matters. it's so great. you know, if there's two minutes left, 10 points is nothing. coming up on march madness, aaron neville joins us with the wins and the misses. stay tuned. hey, did you ever finish last month's invoices? sadly, no. oh. but i did pick up your dry cleaning and had your shoes shined. well, i made you a reservation at the sushi place around the corner. well, in that case, i better get back to these invoices... which i'll do right after making your favorite pancakes. you know what? i'm going to tidy up your side of the office. i can't hear you because i'm also making you a smoothie. [ male announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business.

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it's the water cooler story of the morning, march madness, darren rovell joins us in the chair this morning. this is what i'll start with. i tried to figure out defense. what about steals? who can do this, who can do that? >> before your brackets. >> trying to figure out all these things. i watched the gonzaga, and i did not pick gonzaga, west virginia and indiana -- >> the psychology is gonzaga, wow -- >> let me tell you what i've learned, if you can run down and shoot and it goes through the basket, do you watch that? >> yeah, i watched it. >> did you watch how much better? i watched a lot of other games and i'm dying with the bearcats,

a lot of people miss. but if you can just put it in -- >> here's the one thing you have to know about gonzaga, 14 straight tournaments, okay, they've made. kansas, michigan state, there's one other team there. gonzaga is not -- look how long they've been doing this for. >> but west virginia never looked like they had a chance. >> they're horrible. i like seeing john stockton's son. only air balled the free throw and stockton is the best free-throw shooter of all-time. i got to get to something. >> but the three pointers at the beginning of the game it was over. >> only two upsets in the first half of the first-round bracket, the record is actually three for the lowest. >> wow. >> that was in 2001. in 2000 -- oh, so 2000. in 2001 there were the most upsets, 13. >> what about last year? >> last year there was one on the first day. >> that's it? >> yeah. so out of -- espn had 5.9

million brackets, how many are still perfect? give me a percentage. >> half of 1%. >> it's pretty good? >> really? >> 0.2 percent. you're kidding me? >> 0.2 percent. there's 13,570 brackets still going. i want to get to vcu winning the game over wichita state. you didn't have them either. >> no. >> an incredible story going to the final four from the first four, i spoke to vcu's athletic director norwood teague, the real impact of last year and going into this year. >> more than anything i think the area where we really benefitted was the marketing we got not only for the basketball program and the athletics but the university. our brand was everywhere, all over the nation and you can't put a price tag on that. >> check this out. last year the apparel sales at vcu were 59,000. this is before they made the run.

1.3 million. >> wow. >> that's amazing, up 376%, applications up 13%. this is like a geeky, nerdy thing, this was a net issue in the loyola game, the ncaa has sold the sponsorship to werner ladder, of course, me watching the game like no one else does, i'm, like, wait a second, that's just a crappy ladder from home depot, that was it. >> oh, no! >> and i'm wondering, like, is this a breach of contract and i'm just focused on that. >> if they didn't know about it before, they know about it now. have you said who you picked to win the whole thing? >> i've not done a bracket for the third year because of how angry you are this morning. >> i'm not angry. >> i just get angry if i miss

picks. but kentucky is definitely going to win it all. >> kentucky? >> yes. absolutely blow everyone away. >> darren doesn't do a bracket because he doesn't want to lose to an idiot like me which you wouldn't because i'm tied for second to last. >> you watch the beginning of the game yesterday it looked like -- >> the beginning, they were mooing them out ten minutes in. one more thing, by the way, out of the espn 15.9 million brackets, only one -- >> he picked the wrong bracket. he sent in last year's bracket. >> he did. he got to zero. >> really? >> yes. >> oh, my gosh. that is zero. he's one of the eight. we know one of the eight. when we come back we'll welcome our guest host, bob mcnair, he'll talk football and much more. they've been committed to putting clients first.

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from rags to riches real estate millionaire and houston texans owner bob mcnair talks financing, housing, and the sweepstakes for peyton manning. kinder morgan chairman richard kinder gives us an update on the pending purchase of el paso and shares his thoughts on america's energy policy. and the secret to pulling the perfect pint. ♪ guinness master brewer with the know-how, he's joining us with a few tips. the second hour of "squawk box" begins right now. >> brilliant, billiant! ♪

good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick along with joe kernen and gary co-mkaminski, jeffrey lacquer said the central bank may need to hike interest rates next year because of the current pace of economic expansion. that differs from the fed's stated intent to try to keep rates low through late 2014. lacquer was the lone dissenter in the fed's most recent policy statement. facebook isn't a public company yet, but it wants wall street analysts to be ready when it takes the step. it's invited analysts to its california headquarterers next week to talk about its business model and how to analyze its operations. reuters reports analysts from five to ten of the largest banks will be attending. and poly's new ipad has been hitting the stores, consumers have spent the overnight hours in line trying to get their hands on these. natalie morris joins us from new york's fifth avenue apple store,

and what's the scene there? >> reporter: the scene is crowded. the line behind me is really bulky. it's been raining all night, but to consumers behind me, they don't really care, they've been out in the rain since 3:00, 4:00 a.m. waiting to get their hands on the new device. there is a lot of pent-up demand for this device, because people know that springtime brings a new ipad and people waited for christmas, and if they did wait, early reviews are showing it's a really nice gadget to have. if you're an ipad 1 owner or waiting to own this, the reviews are that you'll really be happy with the new retina display, the 4g service, superfast, the i-photo app where you can edit your pictures, it's such a nice device to have. if you're an ipad 2 users, the reviews are saying make you should wait because it's very similar to the last version, but, again, people just get crazy over ipad releases and you

have people in the queue and people applaud when people get in, and it's worth applause if you buy your ipad. there's a man that's been here monday since noon and he's been eating nothing but hamburgers and if he needs to use the bathroom, apple lets him in to get the store. i guess how you can guess how he takes care of his personal hygiene. >> a little tmi, hamburgers and bathroom breaks in the store. thank you, natalie. top-rated apple analyst dave garrity of gva research joins us with his thoughts. i've been thinking about this apple launch all week, and let me give a sentence. let's say we're five years from now. it's march of 2017. finish the sentence for me, back in march of 2012 with the launch of the ipad, i guess it's ipad version number three, we should have been thinking about what given the next five years when

you think about apple five years from today? >> you should have been thinking about the fact that probably by that point in time 2 billion people will actually be ipad owners and users. or to think differently more in terms of tablet pcs, the category would have grown to that size. >> we had an analyst on earlier who was talking about the margins on these units as they continue to develop the next generation, is it analytical thinking that each new device that apple releases that they can, in fact, increase the operating margin to their pnl? >> the question is to what extent can apple control the pricing on the unit, and the question that will be coming in here is to what extent will you see greater competition coming in. obviously you look forward to competitors in the market, microsoft windows 8 promises to provide at least a competing operating system. to what extent will you see price competition creep in, when we look currently at the ipad price point, pricing goes

anywhere from $300 to $800, there's a lot of room to move here and if you look at what other competitors are doing, one can argue whether the kindle fire from amazon is a competitor, but are looking at price points moving down to $200, at some point in time we have to look here at margins probably being constant and for the growth in the apple products it's more the expansion in terms of the units in the category we mentioned early. >> i think it was miller tayback who said a number of years ago that apple was, in fact, its own asset class and you have sort of everybody, institutional investors, thinking that way, is that -- i can't recall -- you've been around a long time as well -- anything like that, where you may have a short-term period where a specific stock becomes a momentum name, but the idea that apple is looked at by people that manage money as a separate asset class, you look at your portfolio, you have apple and everything else, is that something that is real, and is that sustainable? >> i mean, after apple the next company that's got the highest

market capitalization is exxonmobil, and from that standpoint you would say that oil is an asset that obviously people will need for a longer period of time. to the ebb tent that apple can sustain this position being an asset class unto itself, you have to obviously look and see what the competitor dynamics are going to be in terms of the technology sector. to some extent we see a visionary coming into the company to rival steve jobs in terms of being anticipate future trends, ie, these are elements going in to creating the sustainable value necessary to have it stay as an asset class unto itself. >> i mean, and price targets are somewhat silly, i know analysts have to put them out. when you think about, forget about the price of the stock, but the enterprise value of the stock given what the free cash may be and what they dock with return to shareholders, what kind of numbers do you come up with? >> if i look out to five years that you're talking about, i mean, it's not out of the question given sort of the unit assumptions we talked about

earlier that, you know, it's possible to see apple's value to actually double, to go to a trillion dollars over the next five years, but, you know, that's compound growth over a five-year period that's probably, you know, a little bit less than 20% which is not what apple investors have been accustomed to but it is something which will sustain the company as a core holding. >> wow. kind of crazy, joe. joe, when you think about apple and we talk about the numbers and you and i can think back to the late '90s before the tech bubble, the major difference here i see is we're not talking about a high multiple stock. >> no. >> when you think about the all other companies, cisco plus $500 billion market cap, you were talking about multiples that were exceptionally high, that's the real difference here in terms of where we are. >> right at the top of the interview with garrity, i said 2 billion ipad owners and the ciscos of the past and the other companies that got there, i mean, i was saying it's different this time, again, and i always get nervous when i say that. but i said that first 50 -- when apple was half of where it was, i already was worried.

>> that's the difference. it's the multiple. >> dave, thanks. >> 2 billion ipads and think about it people will be using those ipads probably. >> it's a scary thing, but the numbers are the numbers. david, thanks very much. have a good weekend. all right, our guest host this morning, does he start -- i'm looking -- we need to go and do background. bob mcnair, you had $700 in your pocket. you had a wife and two kids. you came from nothing. are you one of the richest guys in houston at this point? >> oh, i have no idea. but i'm able to buy groceries and that's the main thing. >> sir, you got a real estate firm now. but you were known for co-generation. the largest privately held co-generation firm. we even -- we had presidents that actually talk about you and 41 actually sends his wishes. we want to show what the first, h.w. had to say, dear bob, congratulations on your new line of work. i guess he means hosting "squawk

box." please don't let your new found stardom interfere with your day job getting the texans to the super bowl. barbara and i will be watching. >> how cool is that? >> the president said that. >> the first time we had a president write in which is great. so, i don't even know where to start. i think i want to start quickly on energy, because we had the -- an interior official on earlier. i think he's an undersecretary of the interior, and i asked him this question again and again and again. their cake -- or their -- what they posit is that there's plenty of lands open for development, that the industry is not using, so let's use those up before we open anwr, open some of these sensitive areas since the industry hasn't really opened up the other -- since they have no interest in the other ones. i never know who to talk about. is that true? >> it's really pretty simple. all the land that's leased is not productive land. they make the assumption that all land is leased has minerals.

>> why would you lease it if it's not productive? >> well, because it will be in tracts. you look at that tract and you determine whether you have nom interest in it. there might be some aspect of the tract that has the right geophysical, you know, attributes, so where there's an opportunity to drill, they go in and drill. and where they don't think there's a prospect or making a producer, they don't go in and drill. that's what you're seeing. it's not complicated. >> to me it sounds like for someone to make that claim, it seems like they would know that what they're saying is not really -- it's disingenuous and you're kind of dissembling. that's okay. in politics, that's what you do. >> in politics -- not okay, but that's what they do. but it's a political answer. it's not reality. the reality is that we have restrictions on drilling and it is impeding the development of new fields, there's no question about it.

there's more product that could be brought to the market, john hofmeister, yeah, he understands. >> but how quickly could -- but, i mean, then the white house probably has it right, too, if you announce something today, it might not do anything to $105 oil or to $4 gasoline, right? that's what we said two years ago when we weren't doing anything and maybe if we had done something back then, by now we'd be bearing fruits, right? >> well, you heard discussion about speculators adding, you know, "x" percent to the price, well, it's the speculator that would be impacted by the prospects of further development, because he would be looking out and making the determination. >> so, it might go into the price immediately. >> yes, yes. >> would speculators be thrown off by the opening of the spr? there's a lot of debate back and forth on that. >> i think that's temporary. and, really, that's for emergency use. it ought to be kept for that purpose. but it's a supply and demand situation, and opec is a cartel, and as long as supply is not adequate it to take care of

demand, that cartel can pretty much determine pricing. and crude oil is, what, 60% or so of the price of gasoline. so, until you deal with that, you're always going to be at the mercy of those who control the cartel. >> yeah. we can move now to wherever you want. you want to talk about the economy right now? texas is kind of different, isn't it? i mean, you have a lot of feel for how the economy's going. are we in a pretty solid every here outside texas? >> well, i think we're in a recovery period, but i think it's in spite of a lot of the efforts that have been made, i think that that has restricted some of the recovery. i think the recovery's much slower than if government had gotten out of the way. >> you say similar things that the dallas fed has said, in texas it's not just an oil-based economy, texas has taken steps in terms of less regulation, tort reform, things that could be done on a national level that haven't been done. >> it's an environment that's

friendly to business. and so money, capital is attracted to those environments. and frankly, you know, there's this anti-business sentiment now on the part of the federal government as if they don't understand where the revenue comes from that supports their existence. >> do you know what we hear, bob, we hear that in texas, though, your schools are lagging. that's the -- what i hear held up by the other side when you hear about low tax rates in texas and business is good, and then i hear the lag. is that true? is it a red herring? >> well, number one, you have a tremendous influx of immigrants into houston, and many of those are uneducated and it takes time to educate those folks. but the other thing is, you know, i would argue that all evidence suggests that paying more money does not produce better education. accountability produces better education. and that's what we need to strive for. so, you can look around at areas where they spend more per student, and the education is

not better. >> to get into the tax reform issue, i tried to figure out what your main charity is, but it's a whole page of stuff you're associated with. you do have two foundations, though, education and medical research, so something that's near and dear to you is that charities don't lose that deduction, right? >> right. that is important. what people don't understand is when it's discussed as a contribution being deductible, they think that's some benefit to the contributor. it's not a benefit. if i've got a dollar that i can use for some purpose and i can give that to a charity, i can give them a dollar. but if the government says, no, that's taxable, now i've got 65 cents or 60 cents available to give to the charity, and it's the charity that lost the 35 or 40 cents, so the government is taking it away from the charity. not taking it away from me. i still have the $1 disposable income. >> i've never understood the

argument, it's a charitable deduction, you get it off your taxes. you're giving it away. >> it's meaningless, only to me, but it's interesting to the charity. and who is more efficient. we spend less than five cents on the dollar in administrative costs in our foundations. what's the administrative cost in the government? who can use the government -- the money more efficiently? i think it's pretty simple. >> and as far as -- we're going to get into some of your other thoughts on tax reform, but what do we need? we need a progressive -- you agree that we should have a progressive tax system, right? >> i'm not opposed to a progressive system, and the fair tax which is a national consumption tax is progressive. the tenets of that are it would do away with all corporate income tax, all income taxes, personal income taxes, capital gains tax, tax on dividends, death taxes, and you would be paying tasks based on what you consume and basically people consume what they earn to a large extent. they either consume or they

invest. so, in this case everyone has the opportunity to determine what tax they pay by determining what they consume and how much they spend. >> what would that do to people who have huge amounts of income? what if they were really frugal, if they spent no money, they would pay no taxes, right? >> well, they would be the exception. but if they're not spendeni eni they are investing it. >> how do you get at that? >> it's invested in business and that creates more jobs and that creates more income and that creates consumption. capital is the basis of prosperity, so anything that promotes accumulation of capital is good for society. >> how do you make sure that someone that makes $40,000 a year isn't spending -- you know, isn't at 100% tax rates and the rich people are at zero? >> right. >> well, let me start out by saying there's a prebate,

everybody gets it in advance so it's called a prebate, it covers basic housing, food, clothing. the person at the $23,000 level their tax is zero. today if they earn $23,000, they're paying social security and the employer's paying it so, you know, there's about 13% is the tax rate if there's no income tax. a person that's at $50,000, their tax rate would be the equivalent of 11%. from there it graduates up. the tax on consumption would be 23%. >> but a consumption tax is a regressive tax even with those givebacks at the very beginning, i mean, somebody who is making $75,000 probably has to spend an awful lot -- a huge proportion of their -- of their income on just surviving, getting their kids through, there's probably not a whole lot of savings that's going on at that rate. >> well, but it is progressive. as income goes up, the tax rate goes up. and we have all the studies.

we've spent over $20 million of research on tax policy. we probably spent more money on looking at tax policy than any other project. >> how would -- the rates would go up based on income? >> no. no, there would be no income tax. it would just be based on consumption. when you go out and spay money, you're paying tax, so you're broadening the base. right now the income tax is a voluntary system. if i don't report my taxes, i don't pay any tax unless the government catches me and they estimate there's $400 billion of year on taxes that didn't get reported. >> on the black market. >> or anybody who doesn't have a withholding if you are self-employed. >> or any of the industries that are below the radar. >> for every business transaction that's taking place, you know, in cash, i mean, there's no -- >> but they all consume. >> right. >> and if you had had a consumption tax during the last recession at the 23% level you would have generated more in

revenue for the government than what we did generate with income tax, because consums doption dot vary as much during recession as income does. >> your point was it's easier to collect on a consumption tax collection, your accounts receivable. >> everybody. and one other important thing is in terms of manufacturing and creating manufacturing jobs, what you would be doing, you would give american industry the opportunity to be more competitive worldwide because you're taking all of the income taxes out of the price of their product. and that tax is embedded in the price of the product now. and when it's exported, there would be no tax on it. that puts them in a very competitive position, it would bring manufacturing jobs. >> i think that's true. i think it's true. >> it still seems like the optics question which we can talk a little bit more. >> we can talk more, but it is a progressive tax. i mean, we've studied that inside and out. >> all right. thank you. we'll revisit this when we have more time.

>> sure. >> we got bills and stuff. by the way, if you have any comments or questions or thoughts on the taxes e-mail us here at cnbc.com. you can follow us on twitt twitttwitte twitter @squawkcnbc is the handle. plus we'll drink beer it says here. "squawk box" on this pre-st. patrick's day, we'll be right back. up next adding to an energy empire. kinder morgan buying el paso, but it hasn't been easy. controversy and questions remain for the ruler of gas pipelines. kinder morgan ceo richard kinder joins us next to set the record straight. you had thermal night-vision goggles, like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep,

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welcome back, everybody. kinder morgan on the verge of completing its $20.7 billion buyout of el paso corporation after agreeing with federal regulators to buy back some of those assets. joining us on the squawk line is richard kinder, the president and ceo of kinder morgan. richard, thank you very much for calling in, we epreshia iepresh. >> hi, becky, how are you? >> we appreciate you calling in.

we know kinder morgan agreed to make asset sales, kinder interstate transmission and the 50% interest in the rockies express pipeline, i wonder if you can tell me what the deal looks like after these assets have been sold off, how much you're counting on afterwards. >> well, as we said in the release yesterday, we still expect to meet our growth targets. this is pretty consistent in terms of asset sales with what we've projected when we did the merger, announced the merger last fall, so it's full steam ahead and we hope to close the merger in mid to late may. again, this is a tentative agreement. it has to be approved by the commission and we look forward to getting that done and getting this merger completed. everything else is on track. >> you do expect that this will satisfy the commission, though? >> we do. >> all right. richard, why don't we talk a little bit about what's happening with natural gas prices right now. people have been pretty astonished that natural gas has

maintained this very, very low level as we continue to watch oil prices climb. what do you think is happening here? >> i think what we have is the shale plays that turned the whole industry on its ear, we have tremendous abundance of supply, when you couple that with the very warm winter that we've had, that's led to a tremendous amount of gas storage and low prices. i think long term, though, as a lot of people have said and i'm certainly in that camp, we believe that the demand for natural gas is going to pick up. we're already seeing it in terms of additional demand in the industrial area. i think you will see natural gas displacing more coal on the generating side and even see some modest entry into the transportation segment, so overall in the long term, natural gas is a big winner for america, i think, and for our company, of course, we get paid for moving the gas and other products. whether it's co 2 or refined

products that go through the pipeline, so we're not impacted on a short-term basis by the supply of gas, but i think we're setting ourselves up for a very good scenario if we use natural gas as the lodestone for the natural gas for our future. >> are you talking two years down the road, five years down the road, ten years down the road, when do you think the demand seriously picks up because a lot of this requires new power plants to be built first, correct? >> well, some of that's true. some of it is just switching from coal to gas now. some of that's already been done. i was talking to one of our customers just the other day and in february, which you don't think of as a big electric load month, this particular utility burned more natural gas than they've ever burned in any month in february and that's because they were using natural gas in their plants to displace as much coal as possible. i think you can see -- you will see additional demand on the industrial side already. we're already seeing that.

you'll see additional demand on the electric generation side. some of these older plants, older coal plants, get phased out and just will not be replaced. i think that's in the '15-'16 time frame. >> you say you are a toll road because you only provide the pipeline, but if the natural gas goes up, you can raise the tolls? >> most of our tolls are fixed either on long-term negotiated agreements or per regulation. so we don't have exposure one way or the other to natural gas. >> good morning, it's gary kaminski. >> good morning. >> i think we were the second largest holder of the parent company, the management company before the lbl. you know, richard -- andrew ross sorkin wrote a column earlier in the week talking about the el paso transaction and the relationship with goldman sachs, it's certainly been an

interesting week in terms of goldman related to clients. i really wanted to ask you. you've been a client. you've been a partner. you know about some of the criticism associated with el paso's relationship and goldman being an owner of the management company and the lbo, what are your thoughts? i can think of nobody better to ask about what it's like to be a partner and/or a client working with goldman sachs. >> well, gary, that's a very good question, and unfortunately i can't answer that. there's still litigation going on. no one's accused us of doing anything wrong, but there is still litigation on and i think it would be inappropriate for me to answer a question like that, but i appreciate the effort. >> well, let me just follow-up with this in the sense that you can't speak about the specific litigation. you have goldman sachs in the past has taken a number of your entities public, and so from that standpoint you've been a client on the investment bank. have you felt, given your experience, that you and the

shareholders were served by that bank underwriting and leading these transactions? >> look, we've had a number of banks have helped us over the years, and i think overall we've gotten good service from the banks. >> wow. >> yes, rich, bob mcnair, how are you this morning? >> hi, bob. >> i hope you get out of the warehouse district safely. >> it's been an interesting morning. >> i wanted to ask this question, rich. with all of the new discoveries of gas and -- of gas shale, what impact have regulations had on your ability to go in and develop infrastructure to be able to get that product out? >> well, first of all, that's a big opportunity for us and we're spending hundreds of millions of dollars in the play alone connecting not only natural gas but condensate and crude oil and moving it to more liquid points like the houston ship channel, so it's a big opportunity for

us. my -- we are hamstrung to a certain extent, the whole industry is, by what i think is a very zealous regulatory environment right now particularly at the federal government level, and i guess my grave concern is are we really doing a cost/benefit analysis on some of these regulatory issues. and certainly we want to do everything we can to operate safely and in an environmentally responsible way, but some of the regulatory approaches i think have not been subjected to an adequate cost/benefit analysis to determine whether really they are doing the job at a reasonable cost. so, we would hope we could move faster from a regulatory standpoint. >> so, richard, returning to that issue, and i'm talking in conference to keystone, i know that's oil, but you just said you're involved in that, too, not just natural gas. >> that's right.

>> do you -- you saw what both sides are saying. and the side that wants to do it said that there was a two- or three-year study that had already been done. and then i guess they decided to divert it around some sensitive area. and the obama administration's story is that there needs to be a new study to go around it. i mean, whose -- is everybody being totally forthcoming about this, or is there something else going on here in your opinion? >> well, in my opinion it was a real mistake to deny the permit. i think it had been studied long and hard. pipelines are by far the safest way of moving product whether it's oil or natural gas and we do have several thousand miles of oil pipelines also including two up in canada. and it was a -- in my opinion a real mistake to turn that down. and the real issue here is i think we've created distrust with our largest supplier of oil

to america, namely canada. and you walk into the petroleum club in calgary, as i do from time to time, we have a large office there, and there's a tremendous amount of frustration in canada. they say, look, we thought we had this thing called nafta, the north american free trade agreement, and now you're using a state department permit issue to keep us from moving our oil to the lower 48. so, i think that's led them to be actually be more interested as canadians in finding alternative sources of demand. and i think you're seeing more interest in moving oil to china and other points in asia. now, that benefits us in a sense because we have currently the only pipeline that goes to the west coast of canada. we have our own dock in vancouver. but for the country, america, it's the wrong play. >> richard, what you're saying, for the administration i don't see what the thinking was. because it didn't make unions --

the union guys happy. the oil is getting, you know, hammered now about where gasoline prices are. what -- i just don't understand how it was in the best interests of the administration. are they apieceappeappeasing th change people in the party? the >> you know the people that are totally opposed to -- >> hydrocarbons. >> to hydrocarbons or particularly anything coming out of the oil sands in alberta, and i think that's just a very shortsighted way to look at things. this oil being produced in alberta in the oil sands is going to get moved, it's going to get used, and the real issue for us as a country is do we want to use that from a -- or do we want it to go someplace else. i think what we've done, i think excel will eventually be approved, but i think we have

angered a lot of canadians including the prime minister who has made a trip to china now and talked to them about, gee, we'd like to export more of our oil to you. i think it's very shortsighted on the part of the united states. >> hey, rich, i'm e-mailing back and forth with jim cramer who i know you know well, he says that you are his favorite oil and gas plan man on the planet, and he talks to you often. but he wants to ask you a question, too. he wants to ask you about the texas production. it's been a little bit below to what people are expecting. he hopes you can talk a little bit about that and he's talked about one of the fields in particular where there's about 55,000 barrels a day coming out and i guess that's the gates field. >> that's the shack rock field. >> he mentioned that, too, the gates field and the shack rock field. >> we're pretty much on target so far this year, we're not an enp company, but we're the larger producer and mover of co

2 and we move it from southwest colorado into the permian basin and sell it, sell most of it to third party producers, but we do produce some oil ourselves. a little over 50,000 barrels a day. and we hedge that. we're not a commodity-based company at all. but we're doing pretty well with that and just continuing to march forward with it, and it's been a very profitable endeavor for us. >> he says that that's huge and that's really important. but i guess my question is in terms of exposure to the gas prices and the oil prices that we see right now, oil prices have been incredibly high. do you expect them to continue to come in at these levels even though you have that hedged? >> well, we have about 90% of it hedged, yeah, our sensitivity is very little to oil prices. with the positive high oil prices and right now the oil prices are running about $9 or $10 above what we had in our budget for this year, but it's a

modest positive for us, but i expect oil prices will hold up pretty well. i think internationally there's still an awful lot of demand for it. right now, of course, i think part of it is some of the crisis mentality with iran. but long term i think oil prices will hold up pretty well. >> okay. >> rich, the asset sales that you had to agree to in order to get this transaction to close, is that going to change anything in terms of distribution growth at the mlt and some of the assumptions that were made as well -- >> no. no, it's really very consistent. as we said idea, before the el paso merger and, you know, to put it in perspective, we provided 27% compound annual return at knp since 1997 when we took over and we can't maintain that as we've gotten so big obviously. but before the el paso merger, we said knp could grow distributions to 5% a year and kmi could grow roughly 10% a year. post the merger with el paso, we

expect to grow knp at about 8% a year. about 7% a year. and we expect to grow kmi about 12% to 13% a year, and we're still on target to do that. in fact, this year, as we've announced, we expect to grow knp by about 8% and kmi by about 12.5%. >> okay, rich, we want to thank you very much calling in today. it's been a pleasure talking to you. >> thank you, all, have a good day. >> you, too. still to come this morning, the master brewer at guinness is going to show us the perfect pour as we get set to celebrate st. patrick's day. and senator pat toomey is talking about taking on the s.e.c. he says the agency is dragging its feet on help for small business. he'll be joining us when "squawk box" comes right back. ♪ up next, bank stocks, making the grade. so, should investors be ringing the cash register? a closer look at financials is just ahead. swhat happened.gain

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we're back. the large cap financial fund is up more than 20%, portfolio manager david ellison is feeling good about financials across the board, even with two holdings

that failed the stress test, citigroup and sun trust, joining us is david ellison of fbr. as you've probably heard for years, financials have to lead if the market's going to go higher, and i guess here we are a couple months into the year and the financials are, in fact, leading. you believe in that? if that's the case, do we see a good rest of 2012 for the financials being the leadership group? >> well, i think the financials are obviously much healthier than they were three years ago and the stress test is really a progress report. i think what we're seeing is the markets reacting to the financial system becoming more stable. i think it's helping the whole economy. >> when i looked at your portfolio and we mentioned suntrust and citi, you've got basically a position in a lot of the very large cap as well as the superregional banks. you know, my question is, if one was going to invest in the portfolio, in the fund, what is the differentiation, how do you say the value add is versus

buying a fund like yours compared to an eft or an index fund that basically tracks the large financials? where is the value add? >> i think the cycle we're in now is one where i think you have to take what i call the group hug approach, because the industry's getting better all at once now just like it got worse together. and so the value adds going to be as we move into let's say next year, the year after, where you've got obviously a better economy, everybody's not worried about nonperformers, nobody's worried about the stress test, nobody's worried about the end of the world. then you get into the execution part of the cycle. and that can go on for a long time. that's where ugohing to add value because presumably hopefully i'll be able to pick the better executers than the index funds will. >> in terms of execution, rich kinder was just talking about the total return, the dividend plus the capital appreciation of his companies over the last decade. when you look out at the financials, whose distribution, the dividend, do you see has got the likelihood of the fastest growth to shareholders over the next five years?

>> well, i think most of the companies that you -- that have been talked about by the analysts, i think, you know, clearly jpmorgan is ahead of everybody, primarily because of the very fortuitous acquisitions they made that allowed them to maintain their capital and grow their book value through the entire cycle. but, again, this is an industry that goes in cycles, so we're at the bottom of a cycle. it was a very bad cycle, and one that i hope not to be invited to again next time before i retire. and so this is the part of the cycle where you add a lot of value by sitting there, holding everybody, and then wait for the execution. so, it's not a -- it's not an industry you want to hold for 30 years and we've seen that. i've been in this business since the early '80s and this is -- this is probably the second best time to own these stocks, the best time was really in the early '90s after the '87-'92 cycle with the bailout of the thrift industry. >> well, thanks very much, david, we've got to leave it there. but obviously, guys, a lot of

viewers hoping he's right that this is the second best or best time to own financials for the next months ahead. thanks. >> great. coming up, a powerhouse nfl huddle, bob mcnair, owner of the houston texans will be joined by another bob, bob kraft, the owner of the new england patriots to talk business, the economy, and football. "squawk box" is coming right back. leprechauns, clovers, and beer, everyone has a chance to be irish this weekend. we get a head start on the festivities with guinness brew ma master berger murray.

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let's get to some of our top stories on this friday morning. u.p.s. is pushing ahead with its efforts to try to buy dutch delivery tnt express, u.p.s. said it's in talks with tnt and plans to make an offer, its informal offer at $6.2 billion was rejected because it was too low. and google's privacy policies are reportedly the subjects of new probes by eu and u.s. regulators. "the wall street journal" said the investigation centers on the

company's bypassing of privacy settings of users of apple's safari web browser. google has since stopped the practice but the paper said the company could be subject for sizable fines for any violations. when we come back, free agency is in full swing, patriots owner bob kraft will give us his expert outlook on the business side of football. and we're going to be pouring the perfect pint with fergo murray. that is next, "squawk box" cnbc will be right back. ♪ are energy security and economic growth. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs. at our kearl project in canada, we'll be able to produce these oil sands with the same emissions as many other oils and that's a huge breakthrough. that's good for our country's energy security and our economy.

when you think of st. patrick's day, you think of guinness, and when you think of guinness, you think of the perfect pour. joining us on the set is fergo murray, we like to call him fergie, but that gets confusing because somebody told me fergie would be here, and i was thinking i could offer a pribe to meet prince william or it could be the other fergie. do people call you fergie? >> i'm regional. >> he's the brew master for guinness, first of all we got to learn how to pour it and drink it, because you should always drink from the same side of the glass. is that true? >> absolutely. >> why? >> to get the pull guinness taste, i want you to pull the head and get you the sweetness of the malt and the rosetiness just on this side and the lingering hops on the back of your throat, to do all three, i just want you to do it in the right way. >> i want to learn. but i did not know that you all -- did you know you were supposed to drink out of the same side of the glass? >> i did not.

>> something builds up along that -- >> on the opposite side what will happen if you drink it correctly is you will see a fully laced glass indicating the number of sips you've had. >> oh. >> when you go to a great pub around the world the way to judge how great the pub is see the empty glasses as well because it shows the people in there know how to drink it. >> listen, i've been drinking my whole life, but i've always had a drinking problem -- no, i don't have a drinking problem, but i need to do it right. >> and guinness has to be served right. guinness is iconic in the world, guinness wants a great pub, they want a bartender that will never disappoint, and what i mean by that he'll always pour correctly, he uses the six steps to pouring a perfect pint. this is a quit training program. one is the glass. all bartenders should get it into position. aim the spout for the back of the half, and you'll use it as an indicator, okay? step two, the angle at 45 degrees i'll allow the liquid to flow into the glass nice and smooth and you want to hear the

sound as it comes alive, starts to -- do you hear that? >> yes. >> what we have here is the nitrogen bubbles have been lying dormant in the keg and they come alive in the glass, they can't escape because the surface tension is so fantastic. step one was the glass. step two is the angle, step three is the pour. and step four, the most iconic bit, is you watch it come alive. you watch it surge and settle. what we want to do in a two-part pour -- >> are you close enough for this? you got to really -- >> you got to get into this. it's wonderful. the nitrogen bubbles come up the back side and then in the middle. you want to get strength in the head, because you want to put a dome across the top. the perfect visual pint of guinness is the dome. you can't do a dome -- >> you aren't done with the pour yet. >> just a little bit more. but with guinness you have the fantastic ruby red color, a bar tender doesn't disappoint and i hope i don't do that. guinness adorers want to see it looking gorgeous, because you

drink it with your eyes first. if it doesn't look good, it doesn't give you the same reward. let me finish it off. four was the settle, and five is the top-off, top-off, and i just bring her nice and proud to the rim. beautiful. and step six is we always present that to your favorite custom customer. >> wow. >> looking glorious like that. you get a pint like that everywhere around the world, i'm so proud. that's what it has to look like. >> what are the chances that i go into -- well, in this country i probably never would get one. >> oh, definitely not. in this country, you have absolutely greatest pint, some of the pubs i've been into serve extraordinary. >> new york. >> new york probably serves more guinness this time of year. >> and they know how to do it. >> guaranteed. some of the most fantastic bartenders. >> when we drink it, what am i going to do? i'm going to suck it? >> i'll take you through it. or can i pass you the pint? >> yes, you can. >> young man, here we go.

>> hold the label at the camera. >> that would be nice. >> go ahead, gary, you can drink. >> we have some bottles here. >> this is another one. i will teach you about this in a minute. this is our new -- >> we don't need instructions. >> this is plaque lis black lag. it's supercool. you got to stand like a man. >> i don't know if i can do that. >> you can do it. >> feel confidence. >> can i stand like a boy, please? >> if you stand like this it's a wimpy look. real men and real ladies standing proud, feeling good. >> all right. >> take your space at the bar. yeah? >> all right. >> look over the pint, don't look down at the pint, it's bad manners. elbows up and pour the liquor through the head. good, nice, big sip. and always keep the same size head at the start of the pint as the end of the pint and you'll see what i mean. one more sip and i'll show you the second ring. >> temperature? temperature? >> always between 38 to 42

degrees fahrenheit. >> sake a big sip so you can see the ring. >> on the opposite side you will see the wonderful lacing and the rings. >> do another one so we can see if there's a third ring. >> beautiful. you know how to drink a pint of guinness. i am very happy. >> mm. >> why didn't i get one? >> i didn't realize it was a framing program. >> holy cow. >> less alcohol and less calories. >> you like that, less alcohol. >> 4.2%. just fantastic color. beautiful flavor coming through, sweetness, rosetiness and the go goodness. the nitrogen gives you the -- >> we are allowed to drink on cable. >> we've done it now. i hope that will get you into the mood for a wonderful, responsible drinking on st. patrick's day. >> interviewing bob kraft. >> we've got a great promotion going on as well we want to beat a world record with the most pledges to make st. patrick's day the largest celebration in the world so --

>> fergo, we want to thank you very much for coming in and giving us your expertise. >> it's very easy to talk about guinness beer, beautiful. >> we didn't bog it down with, like, numbers and going up and going down. >> you needed a bit of fun. you needed a bit of fun. they were hitting you with some technical questions. >> we got a huge crowd behind us. >> we've got to go to break. >> now you've got it. >> yeah, you are. yeah, you are there. you go. we'll be back in a moment with new england patriots owner bob kraft. stick around. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus - i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones. tdd# 1-800-345-2550 and i can trade wherever i want, tdd# 1-800-345-2550 whenever i want. tdd# 1-800-345-2550 the kicker? tdd# 1-800-345-2550 i pay $8.95 a trade. tdd# 1-800-345-2550 that's a deal in any language. tdd# 1-800-345-2550 open an account tdd# 1-800-345-2550 and trade up to 6 months tdd# 1-800-345-2550 commission-free. tdd# 1-800-345-2550 call 1-877-561-5445.

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it's "squawk" nfl summit. it's free agency time and teams are stocking their rosters. we'll talk business, politics, and the race to sign peyton manning with patriots owner bob kraft and our guest host houston texans owner bob mcnair. new hurdles in the senate for a jobs bill that passed the house last week with bipartisan support. we'll talk to senate banking committee member bob toomey. and breaking economic news -- look at the government's latest read with the consumer price index numbers that are out at 8:30 a.m. eastern, the third hour of "squawk box" begins right now.

welcome back to "squawk box" here on cnbc first in business worldwide. you are allowed -- you are not -- are you allowed to do that now? >> i had a sip. i didn't do the whole thing. >> you're not allowed -- you're allowed but -- you know what i meant. >> i'm joe kernen along with becky quick, every day after the show you leave and god knows what you do. becky quick is here, gary kaminski is here, and i don't know what you do. >> that was good. that was fun. >> andrew is off this week. >> you missed it. >> sorry, andrew. >> and liesman's mad he missed it. >> sorry, guys. >> if we have a vodka segment we'll bring liesman in. our guest host is bob mcnair and he's chairman of mcnair group,

and checking u.s. equity futures this morning we've had how many days up? how many it is? eight or something? >> pretty much -- >> if it's up today it will be eight days if they finish up today. >> we're indicated up about 13 points so far this morning. let's get to some of our headlines this morning, treasury secretary tim geithner said the u.s. economy is growing again but he cautions it faces some tough challenges the call to action to create jobs and foster expansion. geithner spoke to the economic club of new york last night. he singled out rising oil prices as a potential stumbling block. geithner also argued the economy is now more productive than it was before the financial crisis, but he warns that confidence remains fragile. and good news for apple owners, the newest version of apple's ipad is now on sale at apple stores. the tablet has a sharper screen than most sophisticated television sets but because of a bigger battery it's heavier than its predecessors. you are looking at a live shot at the apple flagship store

in new york city where people camped out for days for this new device. we'll have a live report from the apple store in a few minutes. the stocks in europe climbing to levels that we haven't seen since last summer. in the meantime implied volatility falling to 11-month lows. you can see green airs for the ftse, and the cac and the dax, they are slightly higher. ftse up slightly higher. italy and athens in the red. the sports world all about march madness, but in a few short weeks football fanatics will be focusing on the nfl draft, here to talk about everything from politics to pigskin is bob kraft, owner of the new england patriots and chairman and ceo of the kraft group and our guest host bob mcnair, owner of the houston texans, also our resident sports expert hero is back. bob, thanks, good to see you. and we enjoyed -- did you watch the interview with jonathan, when was that, a couple weeks ago? >> i did. i did. he let the cat out of the bag,

though, that some people think brady is the adopted fifth son, but he fees feeles it should b. >> he was great. it's going to be in addition to your appearances, but he was great when he was on. but, you know, he said some interesting things. do you agree with him that recently instead of that nice rebound we saw sort of the end of last year, early this year, do you think the economy's slowed a little in recent weeks based on what you see at kraft? >> well, in our paper and packaging group, we still actually have business is strong. a lot of our key customers, you know, confidence still isn't there, but people are doing well, and, you know, it just -- it goes back to washington, and we got to stop this bickering that's going on, and too much

red, too much blue, like i said to you, we need more red, white, and blue, more people putting the team first. you got a great pal there, one of the nice people in the nfl, classiest, in bob mcnair. i know he and i have chatted that we should find a way to bring all that money back to america that's sitting overseas and, you know, it's a way to create jobs. we need to create jobs in this country. and, you know, get people to invest in r&d or new capital. if they don't, then make them pay it out in dividends. and we'll create a lot of jobs doing that. and part of what's going on with the republican party today is the bickering going on there is horrible and personal character attacks. they should be talking about how we create jobs. so that the general election can be a dialogue on that. >> so, you're talking about repatriating all those earnings,

i guess, bob? >> yeah. why do we have it sitting overseas? it should be back here, and we find a way to activate it. >> i can give you the bizarre answer that i get, and that's that last time we brought it back, we didn't make the companies hire anyone with it, so they were able to keep the money or give it to shareholders and that's somehow seen as a bad thing, so that that was an inducement for them to do it again next time because they knew they would get another holiday to bring it back again. so, it's, like, twisted crazy logic. you just said even if they didn't use it, you know, you can't force companies to hire people if they don't need them. you can't just do it. but is it so bad if it became dividends? that's, like, ludicrous. >> well, that would get taxed heavily. but i'd like to see them invest it in new capital -- >> plants and everything. better here than there. >> better r&d and if they don't -- it's just sitting idly doing nothing. >> ludicrous.

>> i think that and doing something about the corporate tax rate. we have the highest corporate tax rate -- >> but nobody pays it is, that's what's everybody says. but no one pays it because of all the deductions. >> i got a lot of friends moving their company headquarters overseas. you know, for me personally, i don't care what i get taxed, i'm going to give it to charity or the u.s. government. but corporations have choices where they can go. >> that's true. >> and i really hope we focus on that. those are the two of the issues that i think are very important in the upcoming election. >> good morning, robert, nice to see you and have you with us this morning. >> nice to be with you, bob, i know you are excited that you got all the people in houston that you folks made the play-offs. and you got a great team. i know we play you next year. >> i know. i know. we play you up there and i don't think you'll be as grairks up the gracious up there as you are now. >> people in new england are

like houston. but i think our friends here at nbc that just renewed long term their contract with us can be pretty happy that they've partnered up with a partner, you know. our super bowl game against the giants was the most watched program in the history of television. and that's created an opportunity for new sponsors to come and align their brands with us. people who never would have thought of sports marketing. we're the only really large audience that people can come to. if you think about it, if you take the world series and the nba championship game and daytona 500, bcs, all the great sporting events combined didn't come to the same number of people as our super bowl. 168 million people watched that game. and what you've done down there in houston has been a great help

to the development of it. >> bob, darren rovell here, thanks for joining us this morning. my question to you is, what's your read on all the free agency, the talk of peyton obviously before that and certainly the $50 million guaranteed to mario williams and, you know, the $132 million, the $60 million guaranteed to calvin johnson? what does it suggest about the health of the nfl obviously coming off the lock-out, having a tremendous year, as you mentioned? what's your read on free agency and the money that's being thrown about? >> well, commissioner goodell has done a great job helping to get us this ten-year labor agreement. we have tv agreements that guarantee our revenue stream over the next decade. so, teams know what they have to spend, and the health of the league is very strong. and exciting. now, when people decide, i know one of those players was bob's

player, his football people decided that it wasn't in their best interests. and what's great about the nfl is all 32 cities know every year that their team has a chance to make the national championship and the super bowl. and we all have the same salary caps and people just view value differently. and -- but this is an exciting time. we have record hits on nfl.com, on nfl network. more people are getting their teams ready for fantasy football, and it's a year around sport and something we're very excited about. >> bob, what's your read? you know, people don't realize, some people might not, that in 2006 when you guys took mario williams, it was probably the most unpopular number one draft pick ever. there was booing. it was crazy. six good years with him. but what's it like to let go of

a guy who has been great to your organization? >> well, it's difficult, because he made such a great contribution to our team. and it is interesting now all of a sudden he's, you know, the best defensive player in the league and six years ago we were the dumbest guys in the league. but that's life. but, you know, what you're seeing happen is that there are a few stars around the league that are going to get a lot of money, and with a salary cap, that just means that there's less money to go around for the rest of the other players. i think what this will do ultimately with the new cva, which bob kraft helped on that tremendously, i think what it's going to do, it's going to allow the teams that are in the lower quartile, an opportunity to move up faster, because with the new rookie salary pool, less money is going to go to rookies, so those teams at the lower level are not penalized with the higher draft pick which would have cost them a lot of money. now they have more money available to go out and sign other free agents and there will

be good free agents out there that won't command the $96 million contracts. >> bob -- go ahead, bob, you got a final thought? >> but bob makes a good point. when mario -- and i don't know whether he was paying him $2 million, $3 million, $4 million a year -- >> a little more. >> $6 million, $7 million, whatever it is, 8, 9. >> you're getting close. >> okay. no, no, no. but the point is when someone goes out and pays him $15 million, if you paid him that, your team doesn't get better when you do that. i would say your team maybe gets worse because you have less money available for other players. and only your personnel people understand the chemistry of how that works, and sometimes our fans get upset. we're faced with a couple decisions like that, too. and both you and i want to see our teams win. that's how we manage the

resources available to us that allows us to do that. >> all right. we've got to go, again, we always got to go. bob, did you do a bracket? do you care about this, or can you share with us the final four? did you do a bracket? >> the final four? >> do you do a bracket for the ncaa? >> i keep it quiet, but i must tell you, i mean, i'm a uconn fan. >> ooh! >> no, no, but calipari, john calipari, is a good pal of mine. and then coach k. recommended our coach for -- you know, nbc has a relationship with major league soccer, and the new england revolution has jay heaps who was a walk-on at duke. and coach k. called me personally to make sure we hired him. so, we have a special affection there, too. >> all right. well, it won't be long until we're talking again hopefully,

bob. and, you know, it's going to be a great -- it's not football, but it's the best thing after nfl that we're going to be watching for the next couple of weeks. >> yeah. and you got a great owner there with you in bob mcnair. >> yeah, he's been great. thank you, bob kraft. >> thank you, robert. >> nice to talk with you. >> thank you. nice to have you with us. when we come back, we'll talk about headwinds for regional banks. the chairman and ceo of bank ten will join us right after this. and still ahead this morning, some new obstacles for a popular jobs bill in the senate. we'll talk to the senate banking committee member pat toomey in the next half hour. but, future first, the future of business -- >> in the next five years we should see growth in single family construction with housing starts topping 1.2 million. we are growing at 30, to 35%, so we should overbuild the sector by 2016. nonresidential construction is growing, slowly.

the power, the energy, the mining, the rail sectors are all strong. however, government infrastructure investment in water and sewer as an example is just woefully inadequate. investments in construction in the next few years will have a high lie, because construction productivity is up, costs are down, and the value propositions are compelling. [ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow. [ male announcer ] ducati knows it's better for xerox to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business.

welcome back to "squawk box." it is the buzz story of the morning, the new apple ipad now on sale at apple stores, and cnbc's natalie morris joins us now, again, with more. i don't know, we had guinness, i'm ready to switch -- you can have the ipad, i like the guinness now. >> reporter: yeah. you want a guinness or an ipad, can't we have you really have decision? i think the people here will need a guinness. it's been raining all night. but they don't seem to care, they've been in line for an ipad since monday even. but the doors are finally open now and you can hear the cheering behind me as they walk in to purchase their ipad.

when they go in, they'll get that sort of personal experience where apple will help them set it up essentially if they want a cellular connection like a 3g or 4g connection, then they'll help them set up that as well and they are coming out and talking to the press about how excited they are about their new ipad. this is the consumer experience, that's only half the story because small business and enterprise are really bullish on the ipad, but, you know, if you are oracle or a small business, you don't really wait in line for bulk orders like that. >> yeah. all right, natalie. i'm watching -- leave that there. leave that there. leave that there. becky has got her guinness now, some people wanted you to drink and they were disappointed. >> there weren't enough glasses so i was trying to be nice and let everybody else. >> that was number four. >> being nice. >> gave me a nice one and i should try it. >> it's number four. >> people wrote in, they wanted to know why i didn't drink. i did try it, see. >> mm! >> i didn't drink it the right way.

wow, it's better when you drink slow. >> you suck right through the head, that's what he told me to do. which i did. which i did. >> you are quite happy, aren't you? >> that's what the guy told me to do! >> he did. he did. all right, let's talk about some regional banks. they've been under continued pressure in the face of increasing regulation and deteriorating loan volume. joining us from long beach, florida, is bill green -- >> one sip. >> and bill, thank you for joining us this morning. >> well, i'm grad lad to be her thank you for inviting me. >> we've been talking about the smaller banks all week long, jimmy dunne was here, and he thinks you'll have 8,000 banks going to 4,000 because of more mergers and acquisitions because of regulations. >> i think there's a lot of truth to that. jimmy dunne and seth and i are waiting for you at the first tee of seminole. >> i'll be there right away. >> okay.

stop and think about this. in 1990 there were 15,000 banks in america. today there's 7,364. as you continue to have the crunch on community banks, with all this overregulation, obviously you have directors of various community banks and aging management that has a high anxiety level, so they are sitting around thinking, well, there's a new threshold, a billion dollars. if you are not a billion dollars,boy, you won't make it because you can't handle all the regulations because you don't have the legal staff to take care of you. stop and think about this, 91% of the banks in america today are under a billion dollars. you have 7,364 banks, 6,000 are under $500 million. >> wow. >> so, if you stop and talk about, well, what's going to happen to them and they have to be at a billion, you got 6,000 banks sitting out there thinking, oh, my gosh, what are we going to do next?

so, there's a lot of pressure on m & as right now. i don't think in the low earnings period you have you'll see many in '12. '13, '14, '15, as we get out of this i think you'll see it speed up and heat up. >> bill, that's an argument against regulation in whole. is there a way to have more regulation on the bigger banks without affecting the smaller banks? >> you already have that. in the dodd/frank bill, it really is the dodd/frank wall street protection act and consumer protection act. and it was passed mainly for the larger banks on wall street. let me give you another statistic that's interesting. with the 7,364 banks, 4 banks in america control 40% of all assets. five banks control 55% of all assets. and less than 100 banks or 1.2% of the banks in america control 90% of the assets. so, what you have -- >> yeah, is it your concern,

though, by not having the smaller banks there is a population that is debanked? that there are people who can't get a loan, who can't go in and find a bank? >> no, i'm not -- well, yes, that is my concern. as a matter of fact, 76% of all people in america are employed by small business. and those small businesses, the smaller banks, what we call independent community banks, make 40% of all loans to small business, and they're only 10% or 12% of the total banking assets and 61% of all loans under a million dollars are made to small business from these 6,000 banks. >> so, i guess if there's a message that there's a concern about this, you think it's one that's being heard by washington right now? >> no, i don't. as a matter of fact, when you -- washington seems to have the mindset that one size fits all. it couldn't be further from the truth. our model in independent banks

and the model used on what i call transactional wall street as against relationship main street is totally different. there's no way rationally that the regulators should consider one size fits all. it just doesn't make sense. >> bill, i want to thank you very much for your time today, and hopefully we can see you back here soon. >> thank you. >> appreciate it. got to go quick. i wanted to talk more -- regis and kathie lee and hoda, they drink. >> they pull it off. >> it's been done. medicare. it doesn't cover everything. and what it doesn't cover can cost you some money.

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coming up, we're just minutes away from the consumer price index data. as we head to break, take a look at the dow futures ahead of the numbers. "squawk box" will be right back. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz. an investment opportunity you didn't see before. fidelity's next generation ipad app lets you see what's trending around the world, as well as what over a million fidelity customers are trading throughout the day. and advanced charting lets you customize your views and set up your own comparisons. our ipad app can help refine your strategy or even find a new one. i'm velia carboni, and i helped create fidelity's next generation ipad app. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades and explore your next investing idea.

welcome back to "squawk box." we're just seconds away from the consumer price index data. rick santelli is standing by at the cme in chicago. rick, the numbers, please. >> and the numbers are, up 0.4 on headlines cpi for february, and that is in line with expectations, no revisions. if you strip out the all-important food and energy, it's 0.1 of one percent versus our last look which was up 0.2 and the expectations which were expected to be up 0.2, year over year headline, 2.9, matches expectations, same could be expected for year over year core up 2.2, a tenth lighter than our last look which, of course, was exactly on top of expectations. you know, the market isn't moving much on this. maybe you could say that the slack that should be reflected

in interest rates higher with this type of information today, the ppi yesterday, prices paid and some of the components like empire is already in the market. i think many are going to say, ah, inflation was tame today, because the market doesn't seem to be moving much in interest rates, but these numbers really aren't tame. they're running hotter and ultimately it seems to be traders debate when will we see this inflationary or high price or commodity price get more baked into the cake. i like the one analogy a trader said, it's like fred flintstones' feet, when they touch the ground, when they get better, when globally it gets better, that's when it will start running. it's a process and that process takes some time, but the seeds are already planted. market hasn't moved much on this. but listeners and viewers, wait until 7:00 eastern, and that's

when interest rates moved up and the markets firmed up and coming to the u.s. time zone, there's a bit of optimism maybe in front of a weekend. back to you. >> did liesman see that piece you did a couple weeks ago? you came up with 8% or 9% for stuff we use, right? and now you're telling me -- >> everyday price index. epi, everyday price index. >> have you argued with him about that? >> well, listen, i find that it -- what i was trying to do is put forth that there are other ways to measure inflation. >> i know. >> that aren't written by those that -- >> we need to talk about this. >> yeah. >> just, i don't know, whether we're finding the same thing or not. >> the thing is things you use constantly versus things that are impacted like a house or a car or whatever that you buy infrequently. and we've talked about this. the daily things people use especially, you know, as you move from upper middle-class to middle-class to maybe lower middle-class, you know, it becomes a bigger factor, the things you consume with regard

to your total income parameters. >> you're even saying these numbers which usually don't show what you showed a couple weeks a go, even these numbers are starting to move up a little bit in your view. >> yeah. now, granted, we're up a little less on core here versus yesterday's ppi. but you know how i feel about taking out everything that has inflation. and do you know what, some of the fed statements, you know, let's give them the benefit of the doubt. they don't like to call inflation, higher commodity prices, energy prices they think are temporary. but the issue is that many are talking about, it's like a heartbeat, okay, or ekg, that what they call temporary seems to happen every year, every year and a half, and the frequency it seems to last longer. so, these are issues that the public sees a bit different i think than the fed. >> hey, rick, there's a lot of headlines out this morning across wall street about how interest rates had this big move up. yield on the ten-year up 15% this week.

where would interest rates in your opinion be, take the ten-year, if, in fact, we didn't have the influence of all the quantitative easing right now given all the other variables out there? >> if we're including all central bank liquidity, i think that the slowness in the global economy and some of the issues in europe would have kept rates low anyway. but i think that the jumps when the issues maybe disappear like we've seen this week would be much larger. my opinion is you're talking probably 60 to 100 basis points that the readjustment would be more aggressive if it wasn't not only for the liquidity provided but the positions, the treasuries they take out of the daily trading of the marketplace. >> steve? >> what. >> i didn't know if you wanted me to respond. >> well, yeah. he said a lot of -- basically you've been so right, rick -- >> stoked trouble, joe. >> no, i'm not. >> yes, you are.

>> did you see the report? >> i didn't see the report. i heard about the everyday price index. the question becomes what are you measuring and what are you measuring it for. are you telling me if i look at a certain subset of things bought by consumers that prices are up 8%, i can't disagree with that, rick. i don't know what the weighting is in terms of how much of our total expenditures go to that. what in general i have been interested this is inflation as a gauge for where policy ought to be. that's the debate we have in the market. not the debate about whether or not people are having tough times and whether or not their prices are going up. >> see, steve, in that debate we can co-exist. you're looking at it with regard to how the fed deals with policy -- >> and what the markets should expect from the fed. >> since it is about policy, they skew the numbers because they know what they want the policy to be. >> that's where i disagree with you, rick. i agree with the great conspiracy that you're talking about -- >> it's not a conspiracy, it's a fact. >> what do you mean, a fact that

they skew the numbers? i mean, how do they skew the numbers? >> no, not skew the numbers. they would rather have inflation lower than higher because they believe in keynesian. >> you would rather have them subject that they tinker with it. i think they put it out -- >> they put accounting in place which lowers inflation in my opinion and takes higher prices away but they don't do it with the service sector. let's get jim on, he's got a theory about why it's not apply to the service sector because in that instant it would ramp it you. >> i don't think it matters if they are doing it intentionally or not, the end results is it affe affects people at the lower end of the economic scale at a bigger disadvantage. >> thank you. >> it's not only on the lower economic. >> but especially those on the lower economic scale. >> i had an opportunity earlier this week to speak to a number of people that live off a fixed income and if you have been penalized as we talked about so much with what's happened in terms of your fixed income as a

result of the interest rates, you don't mind the fact that you have to pay more for things, but at the same time you are getting it on both sides. you are paying more whether it's 2% or 8% and your income has basically been crushed. >> ladies and gentlemen at home, let me ask you a question, at this juncture with my dilemma six people against you and one in your favor. what would you do at home? i would like to get off the set and have everybody love me, but the fact is i disagree, because, gary, the issue is where would the economy have been, how would all the people have been hurt in the absence of the policy that drove down interest rates? and the policy that drove down interest rates, the thinking is that that ultimately accelerated gdp, and unmatched -- remember the fed has this blunt -- >> you don't like counterfactuals, here you go. >> i like counterfactuals. i am using one here. >> we would have been worse off without qqe.

>> yes. >> you'll never agree with rick. >> one point before i have to go here which i know can't come soon enough for some of you at home, which is this -- in general, the stock market has liked inflation. for this moment. this period is significantly different from the '70s. michael dardar wrote a fascinating piece that said as inflation expectations has risen, the stock market has risen. what does that say? the stock market wants more nominal gdp, it's different from the '70s. bernanke had the idea that we needed more inflation. >> it's 2% versus -- >> no, the correlation is exactly. >> we're talking real inflation. >> you mean the magnitude. >> even at rick's number we're not -- >> but in general, joe, you see a chart of the inflation expectations they've risen with the s&p. >> and now it's time for me to crawl back in my hole. >> how japan would like it. >> i just tweeted who is right,

rick or steve, should we look at core or -- >> oh. >> go ahead. >> i say look at everything, but i say base policy on the trend, and don't get messed around by some of these things. what does the trim mean? >> let me interrupt one second, the biggest fan of this show has an 82nd birthday today, i want to wish my dad lou santelli happy birthday. >> happy birthday, mr. santelli. thank you very much. the s.e.c. raising concerns about jobs bill that passed in the house last week, senator pat toomey will join us to talk about it. he's a member of the banking committee. "squawk box" will be right back.

welcome back to "squawk box." a house passed jobs bill aiming to help small businesses raising money might also weaken investor protection. mary schapiro sent a letter to the senate banking committee about her concerns about the bill and joining us to talk more about it is banking committee member republican from. pennsylvania, senator pat too y toomey. thanks for being here. >> thank you for having me, good morning, guys. >> last week we had a range of politicians coming on, both republicans and democrats saying it was bipartisan legislation, they were all in favor of this that it would help jobs and now it seems like we are helping from the s.e.c. a little late. what are we hearing from the s.e.c.? >> well, chairman mary schapiro has indicated she's got some

reservations. regulators tend to support the regulation status quo, but this bill passed with huge bipartisan support and let's remember where it came from, those of us who wrote parts of this and chuck schumer and i wrote the part that would allow small companies to do an ipo and not be subject to the most onerous regulations immediately, they will over time, but they get a little window to kind of grow into the ability to afford that and we didn't make these things up out of the clear blue sky. these ideas came directly from the president's job council and the treasury ipo task force. it's endorsed by the president of the united states. it's endorsed by all kinds of business groups. and we've seen that the number of ipos in this country have dropped. companies' access to capital has thereby declined, so i think this would be a very constructive measure to help growing company's raise the capital they need to keep growing and to hire more workers. >> so, the concerns that were raised, do you think they are legitimate concerns?

>> i think they're really over -- overly -- overstated, let's put it this way. for instance, one of the concerns that the chairman shapiro raised is the fact that under our bill an emerging growth companies, one of the companies qualifying for the on-ramp to an ipo would not be subject to the full sarbanes/oxley requirements specifically 440-b which is a very expensive mandate that requires you to have outside auditors to provide audits for your internal controls and all kinds of processes. this has been universally acknowledged it's very, very expensive and there's a real question if it's really worth it. and frankly if investors really do value the information, they can require that they get it. let the markets sort out if the information is really needed. i'm very kept scal about it. >> the big concern is it leaves investors open to ponzi schemes. >> you know, it really doesn't. all the exists fraud statutes

are still in place. there's all kinds of regulatory framework that is still there. you know, fraud is every bit as illegal as it would be in the an sense of this bill, so that's clearly not the case. what we simply do is we say parts of going public have become very expensive. that's why companies are doing less of it in the united states. that's why it's taking them longer to reach that stage. and so we want to give them a window of time to grow into the ability to afford the expense. i think it's pretty reasonable. >> pat, this is bob mcnair. how are you? >> great, bob, how are you? >> i'm fine, thank you. if my memory serves me correct, part of the financial crisis that we went through, i don't recall that it was brought about as a result of small companies going public and defrauding the public. do you recall any involvement on the part of small businesses and smaller ipos being the cause of this crisis? >> i sure don't. i don't think it had anything to do with small companies trying

to raise the capital so that they can grow. i think the fault lies many other places. >> well, in terms of the regulations, it just seems that most of the regulations are directed about things that have happened in the past without really looking into the future. and it's the things in the future -- we don't know what will happen in the future. and invariably reacting to the past does not -- does not deal with these things that can cause problems in the future. but i don't think this was one of them, so i'm just amazed that there would be this resistance to giving small business a little -- a little slack here when they need it. >> i completely agree. and i think most of the opposition is coming from the places we would normally expect it. there's very broad bipartisan support for it. and let's remember, you know, sarbanes/oxley was a reaction to enron. i'm not sure it ever would have stopped enron from happening, but why in the world we'd impose that on a small business that

has nothing, no characteristics in common, it's a totally different universe. i just think this makes a lot of sense to help emerging companies raise the capital they need. >> and, yet, senator toomey, there are several democratic senators who are strongly opposed to this who are voicing their opposition, including carl levin. what happens to this bill on the senate floor? >> so, my understanding of what's going to happen or what's likely to happen is senator reid has announced that the house passed bill, which mind you, had only 23 no votes and about 390 yes votes, that will be the base text. and several democratic proposals will be offered to amend that. it's my understanding that that will require a 60-vote threshold to pass any of those amendments. i think it's unlikely that they'll be successful in watering down the bill in the ways that they would like to, so i'm hopeful that the senate will give a big bipartisan vote to the house-passed bill with little or no changes, although reauthorizing the bank which is a totally separate issue might very well get included.

that's quite possible. do you know the president has indicated he wants to sign this bill. senator reid has said his objective is to get it to the president as quickly as possible. we could actually have some bipartisan cooperation on some very specific measures that will help improve the economy and grow jobs. you know, i thought that's what we're supposed to be working on in washington. >> all right, senator toomey, thank you very much for your time this morning. >> thanks for having me. coming up, more of the day's top stories and we'll get final thoughts from our guest host including his investments both public and private, houston texans owner bob mcnair. "squawk box" coming right back. with a new view of the market, you could see

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welcome back to squawk box.

a multibillion dollar media deal out of canada this morning. bce, parent of bell canada, is buying astro media. owner of tv channels, radio stations and digital properties. price is $2.8 billion when you include assumed debt. still ahead, we'll get final thoughts from our guest host. plus the stock of the day. squawk box will be right back. 3q we always hear about jobs leaving america. here's a chance to create jobs in america. oil sands projects, like kearl, and the keystone pipeline will provide secure and reliable energy to the united states. over the coming years, projects like these could create more than half a million jobs in the us alone. from the canadian border, through the mid west,

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and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz. welcome back to "squawk box." it's time for the stock of the day. >> stock of the day, bank of america stock may be on the verge of doubling its most recent multiyear low. shares had an intraday low of $4.92 on december 19th. that was their lowest point since march of 2009. 9.84 is the number we're talking about to have it double. let's get final thoughts from bob mcnair, owner of houston

texans, owner of mcnair group. $700 million or so in public equities. you've done well. 20% plus per year. >> not every year. the last couple years, yes. >> give us some names. >> we're heavily invested in energy stocks. you know, i believe we've got about 35% of our portfolio in energy stocks. >> so does gary. >> i'm a big believer in that. >> you got some kinder. >> oh, yes. and enterprise. plains all american. exxon. chevron. mainly dividend paying stocks. there's something about if somebody's paying a dividend they're making real money. i can understand that. >> the heavy exposure in the mlps which you mentioned, obviously that's very -- the coordination with interest rates so important. so you obviously don't see higher rates given these investments that you've had. >> i don't see higher rates for a few years. but i am concerned longer term about it because they will be

impacted by those higher rates. if you recall just a few years ago the main concern was is they had debt turning over. what would the interest rates be at that point in time? how much of a negative impact that would have. that's very important. but it's a useful service that they're providing. they're going to be there. one way or another, they're going to be survivors. >> what about the other major sectors? financials and technology? >> we're very light. very light in financials. and we've never been real heavy in technology. that's, you know, like a lot of people i try to do things that i understand. we invest in technology on the private side with people like horsily bridge. they invested these start-ups and early on products. >> what about -- >> still have interest in three coke generation plants. we also are in real estate down in the houston market.

we're involved in the citrus business. king ranch is a partner. they operate a very good citrus operation. we're partners with them, have been for 15 years. they do a great job. we're going more and more into the smaller funds, though, as opposed to these really big funds. >> why? >> i think the big funds, i think there's going to be a challenge for them to be able to make an adequate rate of return to justify that kind of compensation. >> do you still pay 2 and 20 on the smaller funds or push back and say you want to pay a little less? >> sometimes. usually it's something less than that. sometimes we'll have participation where we might be part of or own part of the managing partner where we can add some value. we're in some oil field service deals and we have some people involved with us that have expertise in that field. we can add value in addition to the capital. >> where's peyton manning going to end up? >> peyton's going to go to the team that he thinks has the best chance of winning.

then he'll tell them how much they're going to pay him. >> who do you think that's going to be? obviously other than houston. >> he's been visiting my friend bud adams at the titans. he says he'll pay him anything he wants. he played -- peyton played at the university of tennessee. who knows. but arizona, you know, is a good spot for him. also denver has visited. of course, miami. i think he could -- he could add a lot. i hope he is, you know, 100%. he hadn't gotten there yet. but i have a lot of respect for peyton. he's a great player. maybe the best quarterback that's ever played. >> you didn't even talk to him, did zblou. >> no. because we have a quarterback. >> everybody's got a quarterback. >> we have a good quarterback. we have a quarterback we think can take us to the super bowl. we haven't gotten there yet. that's what it's all about. we have other needs we need to take care of first. hopefully some day maybe we'll have some level of success like bob craft.